Greece’s finance minister has given assurances the government will be able to pay public sector workers and pensioners on time this month, although its next international bail-out payment has been further delayed.

Drôlement encourageant.

Evangelos Venizelos said on Tuesday that as a result of improving trends in revenue collection “we are comfortably placed until mid-November . . . there are no immediate payment problems”.

Civil servants had started to panic at the prospect of October salaries being withheld, just as they received demands for an extra “solidarity” tax on last year’s income, to be paid later this month.

Dozens of protesters blocked access to the finance ministry and other government buildings on Tuesday.

“The situation was looking desperate, our household budget is already tightly squeezed,” said a civil servant picketing the culture ministry building. “The heaviest burden already falls on people like us who are taxed at source and may soon see our jobs cut,” he said, referring to the government’s scheme to cut 30,000 public sector jobs by December.

While Mr Venizelos sounded confident the loan tranche would be paid in November, he warned that if “society and public sector managers fail to act responsibly in the critical fourth quarter” the country’s revised deficit target for 2011 could be derailed. That would put at risk the 2011-2012 budget deal reached with the European Union and International Monetary Fund last week and revive fears that Greece may be headed for a disorderly default.

Mr Venizelos was speaking the day after Greece’s revised targets – a budget deficit of 8.5 per cent of gross domestic product and 6.8 per cent of GDP in 2012 – were approved at a meeting of eurozone finance ministers. However, EU and IMF officials remained in Athens this week to pursue negotiations on structural reforms that the socialist government has so far been reluctant to implement.

Athens is under pressure to adopt a more flexible wage policy, including the abolition of sectoral wage agreements, before the EU and IMF agree to release the next loan tranche. The measure has been raised by the troika on previous monitoring missions but the labour ministry has resisted on grounds it would lead to a sharp fall in the current minimum wage of €750 a month.

George Papandreou, the prime minister, on Monday reiterated his Socialist party’s opposition to further wage cuts, telling a group of lawmakers:

“We are not, and we are not going to become India – a country which does not have labour regulations.”

While the troika has stressed the need for Greece to improve wage competitiveness in order to return to growth and attract investment, union leaders are fighting to hold on to last year’s wage agreement that provides for marginal increases this year.

George Panagopoulos, president of the union federation GSEE, said: “We’re going back to employment conditions that belong in the previous century.”

Public sector unions have called a 24-hour general strike and demonstration in the centre of the capital on Wednesday.

All domestic and international flights from Athens airport on Wednesday have been cancelled or postponed for early on Thursday following a decision by civil aviation workers to join the walk-out, a union official said.

Just before the roof fell in on Kweku Adoboli, the UBS trader whose “miscalculations” cost his bank $2.3 billion, he posted a message on Facebook: “I need a miracle.” Keep an eye out for something similar from George Papandreou, Greece’s prime minister, who has been telling us:

“Let everyone be certain, Greece will not default, we will not let it default.”

Nothing short of a supernatural event is now required for that promise to be met – the Greek bubble is about to pop.

There are similarities between Mr Adoboli’s flame-out and Greece’s imminent bankruptcy: failure of regulation, credulity of investors and a desperation to throw good money after bad. The difference, however, is scale. UBS’s losses are shocking but manageable. By contrast, when Greece repudiates all, or even part, of its 370 billion euros of debt, the foundations of the single currency will crack and many bystanders will be hurt.

Financial pain will be accompanied by the political humiliation of European Union leaders and their apologists in the commentariat who boasted that such an outcome was impossible because there was the “necessary will” to prevent it occurring.

The fallacy at the heart of this crisis is that every financial problem has a political solution. If only. Yet the Brussels elite and its co-conspirators at the IMF continue to promise that by “doing all it takes” they will, somehow, defy indefinitely economic gravity. This illusion of political primacy is perpetuated because a confession of impotence would not only undermine the worth of those in power but also expose the euro’s fatal flaw:

Monetary union without fiscal union is a marriage that weds the prudent to the profligate with no control over the latter’s spending.

Voters who were taught that debt-fuelled consumption was the path to prosperity are now shocked to discover that the racket is bust.

Unwilling to accept the agony that comes with retrenchment, they expect those in charge to administer analgesics. In the short run, chary of disappointing the electorate, pusillanimous ministers load up the system with financial morphine. For a while it feels good. Then the patient demands a bigger fix, and another, and another. Eventually the drug providers wake up to a nightmare: the syringe is empty. When costs rise exponentially, even the rich run out of money